Zero-Retail Reconstruction: Solution or Avoidance?

Recently, the trend of "zero-retail," which significantly scales back or entirely excludes commercial facilities, has been gaining traction in the urban redevelopment and reconstruction market. This approach is calculated to avoid the burden of coordinating complex interests with commercial property union members and to block the risk of long-term vacancies and unsold properties after completion. This trend is further supported by the normalization of online and non-face-to-face consumption (in fact, in 2025, domestic online shopping transaction volume reached 272.398 trillion KRW, up 4.9% from the previous year, recording an all-time high, with mobile shopping accounting for 77.6% of the total. (Source: National Data Agency, "December and Annual Online Shopping Trends 2025")) and the strengthening of community features within apartment complexes (fitness centers, cafes, education, childcare, etc.), which have narrowed the scope of traditional on-site retail complexes that previously relied solely on the number of resident households.

However, it is difficult to define this as the standard solution for redevelopment projects. While it is clear that neighborhood retail units with outdated standards have reached their limits, completely excluding retail space may avoid short-term risks but could ultimately close off opportunities for long-term competitiveness and value growth for the entire complex.

There are certainly locations where boldly cutting down on retail is rational. These are areas with small catchment populations, limited external foot traffic, locations near already established solid commercial districts where competitive advantage is hard to secure, or sites that simply lack the conditions to generate independent destination appeal. On the other hand, the situation is different for large-scale, core redevelopment sites that can absorb regional demand. A meticulously planned commercial space becomes a powerful point of differentiation, elevating the complex into a local landmark and a self-sufficient living zone. Ultimately, the essence does not lie in a binary choice of supply or no supply, but in the "redefinition of appropriate scale and role" tailored to the character of the location, its contribution to residential value, and the actual local spending power. The key is not whether to build retail spaces, but what kind of commercial spaces to create and how far to set the range of customers that space will accommodate.

The Starting Point of Vacant Retail Space

The common denominator of sites that turn into ghost retail complexes after completion is a distortion in the planning sequence. They set a figure for expected development profits first, and then work backward to fit in the area, circulation, shop zoning, and occupancy conditions to match that number. This method gives birth to standardized, individual-sale retail complexes that exclude any differentiated concepts, ultimately leading to rejection by the market.

Unlike residential facilities, the moment a commercial district stops functioning, the retail space loses its utility as an asset, and the rate of value decline due to prolonged vacancy is extremely steep. The reality of retail development profits lies not in the sales proceeds, but in the continuous rental income and shop sales that follow after the commercial district is activated. This is why a mid-to-long-term master plan that guarantees sustainable operation after completion—rather than a cash-out plan focused on short-term sales income—must be established from the very beginning of planning.

The Common Thread of Success: "Destination Commerce" Beyond Accessory Facilities

The paradigm of commercial facilities in redevelopment projects has completely shifted. While the past focused on resident-exclusive convenience businesses such as laundromats, convenience stores, and cram schools, in major mixed-use developments, unique tenant arrangements that draw in external demand are now driving the asset value of the entire complex.

Representative domestic and international mixed-use development cases are as follows. These projects did not confine retail spaces to being accessory spaces of the residential area. They transformed them into independent destinations that attract regional consumers by creating clear purposes for visiting, such as dining, culture, leisure, and tourism.

Azabudai Hills, which opened in November 2023, designed its commercial facilities not as convenience facilities of the complex, but as the reason for visiting itself. Luxury houses like Hermès, Dior, and Cartier coexist in one complex with markets containing fresh food and delis, allowing high-end shoppers and everyday grocery shoppers to share the same space. However, what makes this place a true destination is outside the stores. The landscaping, which covers the low-rise roofs with greenery along the sloped terrain, becomes a scenery worth walking in itself, and the streets where the central plaza, gardens, and curved architecture blend in the middle of the city make even those with no plans to shop pay a visit. Galleries and cultural facilities are located in between, giving people a reason to stay wherever they stand in the complex. It is a structure where a single anchor does not take responsibility for attracting crowds, but rather the gardens, plazas, markets, galleries, and boutiques each function as independent destinations. The accumulated stay experiences lead to the symbolism of the entire complex, encompassing offices and residences.

Of course, it is difficult to directly copy the Japanese structure, where developers hold the complex long-term and recover investments over decades, to domestic redevelopment projects that recover business costs through sales. However, what we should bring from Azabudai Hills is not the development method, but the design principles that give "purpose" to commercial facilities.

The applicable points in domestic redevelopment projects are clear. Public open spaces and landscaping secured to meet legal standards can be designed not as leftover spaces of the complex but as foot traffic routes leading to retail spaces. Instead of splitting and selling the entire retail space into small pieces, the core zones can be operated integrally to maintain the consistency of the tenant mix. Cultural and experiential spaces can also be placed as anchors to attract external visitors, not just from the perspective of rental income. Even if we cannot match the scale and speed, the reasons for people to visit deliberately can be sufficiently designed in the planning stage. This is why the question of redevelopment retail must move from "What businesses should we put in for the residents?" to "Have we secured content that will make people from outside visit deliberately?"

Overcoming the Gap Between Hoped-For Rent and Feasible Rent

The biggest obstacle encountered in the consulting process is not the irrationality of a specific person, but when highly reasonable viewpoints from each party's perspective clash.

Union members who have owned assets for a long time naturally demand high expected rents after reconstruction. On the other hand, tenants calculate their affordable rent limits by thoroughly examining expected sales, costs, and operating expenses. In actual sites, a significant gap occurs between the union's expectations and the appropriate rent verified by the market.

This gap cannot be resolved by vague compromises or forcing concessions. Rather than simply arguing over rent figures, we must prove with objective data whether tenant demand that can afford those conditions actually exists in the market.

• Actual rent and vacancy rate trends of surrounding competing retail spaces

• Realistic sales structures and cost analyses by business type

• Brand opening guidelines of major tenants

• List of potential tenants (Pool) that can be attracted

Visualizing the gap between hoped-for rent and feasible rent with quantitative data to narrow the mutual gap—that is, deriving the intersection of the asset's desired expectations and the market's capacity—is the practical role of consulting.

The Practical Criteria of Brands Deciding to Open Stores

Another frequent mismatch on-site is the conflict between 'the brand desired by the owner' and 'the spatial specs required by the brand.' Unions expect high brand value and high rent simultaneously, but an anchor tenant's store opening review does not stop at simple location or size. In particular, the level of co-occupying brands and the harmony of the entire tenant mix become key criteria for judging the activation of the commercial district in the future. The completeness of the entire space, not just the conditions of individual shops, determines the success of attracting brands.

[Case Study: Attracting Starbucks Reserve to a Mixed-Use Retail Complex in Dongtan 2 New Town]

This is a case of attracting a Starbucks Reserve to a space (approx. 991 m²) owned by 8 owners who divided sections within a large-scale complex building.

Until the contract was signed, the project went through difficulties for about six months, with negotiations breaking down twice on the day of contract signing due to differences in hoped-for profits by owner, facility reinforcement to meet Reserve specifications, and division of major repair and interior costs due to double-decking. However, an agreement was reached by coordinating the issues while presenting objective MD standards and a common vision for mid-to-long-term value growth. This shows that even for retail spaces with multi-ownership structures, structural challenges can be solved if principles and directions are clear.

Three Key Principles Determining the Success of Redevelopment Commercial Facilities

Key projects that have performed mixed-use commercial facility development and MD planning in major urban redevelopment projects are as follows.

The three success criteria for commercial facilities derived through numerous mixed-use development practices are clear.

First, natural connection with external circulation. Rather than remaining within the boundary of the complex, it must connect seamlessly with surrounding street commercial districts, station areas, and crowd-attracting infrastructure to naturally draw in external pedestrian flow.

Second, appropriate scale tailored to precise market positioning. If it is scaled down too much compared to demand, it loses its competitiveness and absorption power as a commercial district, and if it is expanded excessively, it leads to unsold and vacant properties, causing the slumization of the complex. The threshold scale that the location can digest must be calculated calmly.

Third, consistent direction of stakeholders. The union, builder, and operating body must maintain a common master plan that looks beyond simple sale to lease and operation after completion. The interest relationships must not shake at each development stage for the initially planned MD to be fully implemented.

The competitiveness of commercial facilities is not completed by physical design or one-time figures alone. It is finally demonstrated when location, appropriate scale, content, and sustainable operating strategies work together consistently.

Apgujeong, Seongsu, Yeouido: Showrooms of Local Culture

The redevelopment commercial facilities of Apgujeong, Seongsu, and Yeouido, which will be supplied in the next 5 to 10 years, will become new reference points for future Seoul retail. As all three regions have unique locations and consumption cultures, the commercial spaces here must be completed as showcase MDs that capture the unique tastes of local residents and external purpose visitors, beyond simple merchandise stores.

The essence of future commercial spaces that these core redevelopment sites should aim for is a 'culture showroom that aggregates local culture.' As Azabudai Hills shows, the competitiveness of commercial facilities comes from how closely the reasons for people to visit deliberately are planted throughout the complex, not the scale of the stores.

The essence of future commercial spaces that these core redevelopment sites should aim for is a 'culture showroom that aggregates local culture.' The answer that redevelopment projects should find between simple avoidance-type zero-retail and reckless oversupply is clear. It is the appropriate scale that the location can accept, killer content that outsiders will willingly visit, and the agreed-upon execution power of stakeholders who take responsibility even for operation after completion.